Eli Lilly & Co. (NYSE:LLY)

The analysis of the liquidity ratios over the examined periods reveals several noteworthy trends. The current ratio demonstrates a fluctuating pattern with a general tendency toward improvement in the later stages. Starting at a relatively high level in early 2021, it declines moderately through 2022 but then shows a marked recovery from 2023 onward, reaching its highest value near the end of the period. This trend suggests a strengthening in the company's ability to cover short-term liabilities with current assets over time, particularly in the most recent quarters.

In contrast, the quick ratio exhibits a gradual decline throughout the entire timeframe. Beginning at a moderate level in early 2021, it experiences a steady decrease with occasional slight recoveries, but the overall movement is downward. By the end of the period, the quick ratio is at its lowest point observed across the reported quarters. This indicates a reduced capacity to quickly convert assets into cash to meet immediate obligations, reflecting potential increased reliance on inventory or less liquid current assets.

The cash ratio follows a similar declining trend as the quick ratio and even shows a more pronounced decrease from mid-2021 onwards. Initially, the ratio fluctuates near the mid-0.2 range but steadily lowers, reaching a low point near 0.09 in late 2025 before a brief rebound. This pattern indicates a decrease in the most liquid form of assets available to cover current liabilities. Such a decline might imply constraints in cash reserves or a strategic allocation of cash balances elsewhere.

Overall, while the current ratio suggests improved liquidity and capacity to manage short-term debts in recent quarters, the declining quick and cash ratios highlight a deterioration in the company's immediate liquidity position. This divergence points to a possible increased dependence on less liquid current assets such as inventory to maintain liquidity levels. Continuous monitoring of these ratios is advisable to assess whether this strategy affects operational flexibility and financial stability.

Current Ratio

Fluctuated with a declining trend through 2021-2022, followed by a steady increase and reaching peak levels by early 2025, indicating enhanced overall short-term liquidity.

Quick Ratio

Displayed a consistent downward trend over the periods, reflecting diminishing quick asset coverage of current liabilities and potential liquidity risk.

Cash Ratio

Decreased progressively, suggesting erosion in immediate cash availability despite fluctuations, possibly indicating tighter cash management or utilization.

The financial data over the examined periods reveal several notable trends in liquidity and working capital management.

Current Assets

The total current assets have shown a general upward trajectory. Starting from approximately 16.6 billion USD at the beginning of 2021, the figure increased gradually through 2021 and 2022, reaching about 25.7 billion USD by the end of 2023. A marked acceleration occurred in 2024, with current assets rising significantly to over 32.7 billion USD by the close of that year, and further expanding steeply in 2025, peaking near 62.1 billion USD by the third quarter. This indicates a substantial enhancement in liquid and short-term asset holdings, especially prominent in the most recent periods.

Current Liabilities

Current liabilities exhibited more volatility as compared to current assets. After fluctuating in the range of 11.7 to 17.1 billion USD throughout 2021 and 2022, they showed considerable growth during 2023, increasing to approximately 27.3 billion USD by year-end. The upward trend continued, albeit with some fluctuations, with liabilities surpassing 30 billion USD in early 2025 and reaching over 40 billion USD by the third quarter of 2025. This growth in liabilities alongside assets signifies increased short-term obligations, intensifying notably in 2024 and 2025.

Current Ratio

The current ratio, a key liquidity indicator, generally oscillated around the benchmark of 1.0 to 1.4 over the entire period. Initially, the ratio decreased during 2021, falling from 1.42 to as low as 1.05 by the end of 2022, reflecting tightening liquidity conditions. During 2023, the ratio dipped further, reaching a low of 0.94, indicating a potentially insufficient buffer of current assets relative to liabilities at that time. Subsequently, the ratio demonstrated recovery and improvement through 2024 and into 2025, climbing to a high of 1.55 by the third quarter of 2025. This resurgence suggests strengthening liquidity, with current assets increasingly outpacing current liabilities toward the latter periods.

Overall, the data show that while both current assets and liabilities have expanded considerably, particularly since 2023, the increase in assets has outpaced liabilities in recent quarters, as evidenced by the rising current ratio. The earlier periods featured relatively constrained liquidity, but the improvement in the current ratio implies enhanced capacity to meet short-term obligations in the latest quarters. This could be indicative of strategic adjustments to optimize working capital and strengthen the liquidity position over time.

The analysis of the quarterly financial data reveals several important trends regarding liquidity and short-term financial health.

Total Quick Assets

Total quick assets displayed an overall upward trend from March 2021 to September 2025. Starting at approximately $9.7 billion, the figure rose moderately through 2021 and 2022, reaching over $12.6 billion by the first quarter of 2023. Subsequent quarters showed further increases, hitting a peak of nearly $29.4 billion by September 2025. This indicates a strengthening in liquid assets available to meet short-term obligations over the period.

Current Liabilities

Current liabilities also increased consistently across the analyzed timeframe. From about $11.7 billion in March 2021, current liabilities fluctuated but generally grew, reaching nearly $40.1 billion by September 2025. There is a marked acceleration in liability growth starting after 2022, particularly toward the end of the period. This increase in obligations could heighten liquidity risk if not matched by sufficient assets.

Quick Ratio

The quick ratio, an indicator of the company's ability to cover current liabilities with quick assets, showed a declining trend overall, despite some fluctuations. Beginning at 0.83 in March 2021, the ratio dipped below 0.70 for most quarters following mid-2021, with several quarters reaching as low as 0.52 to 0.59 during 2023 and 2024. A slight recovery to 0.73 is noted by September 2025. Generally, a quick ratio under 1 suggests that quick assets are less than current liabilities, implying potential liquidity pressure or reduced short-term financial flexibility during much of the period analyzed.

In summary, although quick assets increased significantly over the analyzed period, current liabilities grew at a faster pace, leading to a declining quick ratio. This trend points to increased short-term financial obligations relative to liquid assets, which could signal growing liquidity risk. It is advisable for management to monitor this ratio closely and consider strategies to either boost quick assets further or control the growth of current liabilities to maintain adequate liquidity levels.

Total Cash Assets

The total cash assets have exhibited fluctuations over the analyzed periods. Initially, there was an upward trend from March 2021 through December 2021, reaching a peak near the end of 2021. This was followed by a decline throughout most of 2022, hitting a low in December 2022. Subsequently, cash assets showed some recovery through 2023 and 2024, with intermittent rises and falls. A notable surge is observed in the last quarter reported (September 2025), where cash assets sharply increased to 9,913,500 thousand US dollars, significantly higher than prior periods.

Current Liabilities

Current liabilities have generally increased throughout the entire timeline. From March 2021 to December 2021, values fluctuated but maintained a relatively moderate increase. Starting in 2022, current liabilities grew steadily and accelerated particularly in late 2022 and into 2023, peaking in the last recorded quarter (September 2025) at over 40 billion US dollars. This consistent rise suggests increasing short-term financial obligations.

Cash Ratio

The cash ratio, a measure of liquidity calculated as cash assets divided by current liabilities, has generally demonstrated a declining trend over time. It started at 0.26 in March 2021, experienced minor oscillations but showed a gradual decrease, reaching lows around 0.09 to 0.11 during parts of 2023 and 2024. A marked improvement is seen in the final period (September 2025), with the ratio increasing to 0.25, nearly recovering to earlier levels. This pattern reflects fluctuations in the company’s immediate liquidity position, paralleling the changes in cash assets and current liabilities.

Summary Insight

Overall, the data indicates that while the company’s current liabilities have steadily increased, cash assets have been more volatile. The resulting cash ratio reveals declining liquidity for most of the observed timeframe, with potential liquidity risks during periods when the ratio dipped below 0.15. The sharp increase in cash assets and improved cash ratio in the latest quarter could signify a strategic reinvestment or an improved liquidity position. Continuous monitoring of these metrics is recommended to assess financial stability and short-term risk exposure.